When a homebuyer is unable to attend an in-person closing, some opt to close remotely instead.
For decades, investors, sellers, and out-of-state buyers have closed on property remotely. Furthermore, the COVID-19 pandemic prompted many buyers and sellers to conduct remote closings rather than in-person closings in a real estate agency.
While closing on a home remotely can be more convenient and allow you to maintain social distance, it may not be available in your state. Even if it is available in your state, you may still be required to complete some aspects of the closing in person. Here are some things to consider before opting for a remote closing on a house over an in-person closing.
What is Remote House Closing?
A remote closing, also known as a virtual closing, is similar to a typical closing in that many or all of the procedures are carried out remotely. During a traditional closing, for example, the buyer, seller, real estate agent or Realtor, and attorneys usually gather around the closing table to make required payments and review and sign an agreement.
All participants can complete all or portion of the same stages using a computer from the convenience of their own house or office, with remote closing. Remote closing is usually connected with eMortgages, which are mortgage loans that have been digitally established, executed with electronic signatures, and maintained online.
What Is the Process of Remote Closing?
When you’ve finished house hunting, put an offer on a house, and had it approved, it’s time to close and acquire the keys to your new home. Instead of meeting in person, the home purchasers and other parties involved can meet and complete the closing online with a virtual real estate closing.
You can anticipate meeting remotely utilizing a video conferencing program such as Skype, Zoom, Google Meet, or others for a fully online closing. Any payments required for closing will very certainly be made via electronic transfer. Also, mortgage documents will have to be signed online.
However, not all remote closings are the same. You can’t complete all closings totally online due to varying e-closing rules across the country. Depending on your state, the process may differ slightly from what we explained above. Currently, there are three primary “models” of online closing: the hybrid technique, remote online notarization (RON), and in-person e-notarization (IPEN).
#1. Hybrid Closing Method
Online closing is permissible in many states, but it is a little more problematic in others, such as Kansas, Connecticut, and New Jersey. COVID-19 has made it possible in most states to close on a home digitally in order to comply with social distancing requirements, but some of the executive orders making this possible are not permanent. If your state’s digital closing policy is unclear, don’t worry – you can still close on a home online.
Using the hybrid technique, you can electronically sign everything that does not require a notary before your actual closing date. When that date arrives, you can meet in person with a notary or closing agent to sign the remaining documents and receive the keys to your new home.
While this method isn’t completely remote, it is totally legal throughout the country because you’re still signing necessary paperwork in person. It is also less risky in terms of social separation than regular closing. Because you can make payments and sign paperwork before your actual closing date, the procedure is significantly sped up. The majority of remote closings utilize the hybrid closing method.
#2. Remote Online Notarization (RON)
Remote online notarization, or RON, allows you to complete the full closing procedure from the convenience of your own home. Instead of confirming your identity in person, you will most likely video conference during the closing process and produce identification documents such as your driver’s license or passport.
As of 2021, RON is legal in the majority of U.S. states. However, the following states do not have a permanent RON law, perhaps making entirely online closings only temporarily possible:
- Alabama
- Arkansas
- California
- Connecticut
- Delaware
- Illinois
- Kansas
- Mississippi
- State of New Hampshire
- Newark, New Jersey
- State of New Mexico
- North Carolina (NC)
- Maine
- Massachusetts
- Oregon
- Rhode Island, Providence
- West Virginia (WV)
If you live in one of these states and the executive order enabling RON in your region has expired, you can still complete at least a portion of your digital closing online by using the hybrid procedure described above.
#3. In-Person E-Notarization (IPEN)
The process of signing closing documents electronically but not remotely is known as in-person e-notarization or IPEN. An electronic notary is permitted to notarize without the use of paper. However, all persons involved in the closing must be physically present.
Although this type of online closing must be completed in person rather than remotely, it reduces paper waste by using electronic documents. It helps to safeguard your closing process by verifying your identification in person. While IPEN is not a fully “remote” way of closing, it does have advantages.
What Is a ‘Wet Signature,’ and When Do You Need One?
A “wet signature” is a real, physical signature on a document as opposed to an electronic one. Technically, thanks to RON, one can properly sign all documents virtually if your state allows it.
Some states that do not have permanent RON bills may need you to sign some of your mortgage documents, like promissory notes or other notarized closing documentation, in person. Some states, and even your mortgage lender, may need this for legal reasons, such as fraud prevention.
The Real Estate Industry’s Adoption of Remote Closing
Digital closings existed before COVID-19, although they were not as widely used. In a typical real estate transaction, closing costs are often paid by wire transfer. Online closings were occasionally utilized by out-of-state property buyers who couldn’t attend the closing in person, but they were normally considered a luxury.
Despite widespread adoption as a safe and handy option, remote closing is still frowned upon in many areas. Although remote closings can help you avoid becoming ill during a pandemic, there are additional factors to consider, such as fraud. Because of concerns about identity fraud and other security and privacy issues, most states have hesitated from enacting RON legislation.
Some areas in the United States also have intricate closing laws that may necessitate the presence of a real estate attorney during these events, making a remote closing impossible.
How to Close on a Home Remotely
Many purchasers appreciate the ease of completing the entire home purchase online, from virtually visiting the property to electronically signing documents.
Buying a home in this manner does not, however, imply that you are alone in the woods: You can still ask questions regarding mortgage and purchase documents before signing them.
#1. Locate the best real estate agent.
When buying a home remotely, referrals are still a valid option for finding an agent.
You can also do phone or video chat interviews with at least three agents to determine who will be able to examine possible houses with the same critical eye you will.
Instead of relying just on listing images and pre-recorded videos, ask an agent to take you on a private virtual tour. You will be able to ask questions in real-time as a result of this procedure.
When you find the ideal house, your agent can assist you in negotiating a contract, just like they would with any other transaction.
#2. Get your documentation in advance of the closing.
Your closing agent will send you all of the paperwork you’ll need to sign. Use the time between receiving the papers and your closing date to go over them. You may discover problems that need to be corrected, and you will almost certainly have some queries.
To maintain your closing on time, resolve any concerns as soon as possible. When you’re through, sign the documents that don’t need to be notarized. Your settlement representative will inform you of which documents are required.
#3. Be aware of your notarization needs.
Where you live and who your lender is will determine how you must sign and get notarized closing documents.
Some states and lenders permit a completely electronic process, which includes working with a remote notary who witnesses your signing via webcam.
Tip: You’ll need to show your photo ID and answer questions to prove your identity when getting notarized.
It’s also possible that your state or lender will ask you to get your signature witnessed in person by a notary. To keep everyone safe, wear masks and meet outside or in a well-ventilated room. It is possible that you will need to return signed paper documents through courier or overnight delivery.
#4. Pay closing charges using a bank transfer.
Check with your bank at least a few days before closing to learn how to initiate a wire transfer for closing costs. Check that you have the settlement company’s instructions for sending the funds, including the correct account number.
If you receive instructions via email, call your settlement agent to confirm; wire transfer fraud is a serious concern.
Wire transfer is a favoured method for sending money since it is secure and fast: while transfer timeframes vary, banks normally handle wires the same or next business day.
Remember to keep in mind cut-off hours, weekends, and holidays. To be on the safe side, start a domestic transfer two days before closing.
#5. Obtain delivery of your keys
In a remote closing, the seller will not provide you with the keys. Instead, the transfer will be handled by the settlement agent. Your keys may be delivered to you, or you may choose to pick them up when you arrive at your new home.
Remember to compare as many lenders as possible in order to find the best loan for you. You can compare mortgage rates from our partner lenders without leaving Credible. It’s risk-free, easy, and only takes a few minutes.
Benefits and Drawbacks of a Remote Closing
Prior to the epidemic, military troops and other relocating workers were among those who were sometimes forced to close on a home remotely, eye unseen.
Remote closings have become more common during the pandemic, with physical distance being so critical for avoiding COVID-19.
Pros
#1. They are more secure.
The main reason for remote closings these days is to reduce the chance of contracting or spreading COVID-19. Because real estate brokers and notaries generally interact with a large number of individuals indoors on a daily basis, they could easily become superspreaders during a pandemic. Remote closings contribute to everyone’s health.
#2. They are more effective.
Document signing becomes much easier to coordinate if you don’t have to be in the same area at the same time as the other parties. Except for those that require notarization, you can sign most documents on your own time. You may not need to take time off work.
#3. They provide you with more time to go over your paperwork.
When a transaction is closed remotely, you are more likely to receive documents ahead of time rather than seeing them for the first time at the closing table. Getting the papers ahead of time allows you to thoroughly review them.
Tip: Before signing, make sure you ask your real estate agent and mortgage lender any questions you have.
You can also perform an online research to comprehend unfamiliar documents and words and confirm anything someone with a vested interest in the transaction has told you.
Cons
#1. You’ll have to rely more on your real estate agent and home inspector.
You can only see what someone else is willing to show you if you never visit a home in person. You must have complete faith in your real estate agent. They should be looking out for your best interests and show you all of the home’s defects, not just its selling aspects.
A home inspection can act as a check on your agent’s honesty, with the proviso that inspectors are trained to spot problems that agents may miss.
Tip: Request additional input on any issues that worry you. Also, make sure your purchase agreement includes an inspection contingency so you may back out if the inspector’s findings aren’t to your liking.
#2. You’ll be unable to perform a final walkthrough.
Buyers typically view the house one last time before closing to ensure that it is in the same condition as when they had it assessed.
Again, you must rely on your agent to finish the last walkthrough. You can do it jointly through video call, but it won’t be the same as being there in person.
In conclusion
Remote closing is a speedier and more convenient way to acquire the keys to your new home. However, the laws aren’t the same for all closings in the United States. Before deciding if this type of closing is right for you, be sure to examine remote notarization rules and RON executive orders in your state.
Remote Closing FAQs
What happens if house doesn't close by closing date?
If the closing date is missed, the purchase contract will at the very least expire. The parties are no longer involved in an active contract with each other once the purchase contract expires. The usual course of action is to extend the closing date, but the sellers may not agree.
Why would a closing be delayed?
Pest damage, low appraisals, title claims, and flaws discovered during the home inspection may all drag down the closing process. There may be instances where the buyer or seller changes their mind, or where financing falls through. Other concerns that can cause a delay in the closing process include residences in high-risk locations or uninsurability.
How common is it for closing to be delayed?
According to the most recent National Association of REALTORS® (NAR) Confidence Index survey, 73 percent of home-purchase contracts are completed on schedule. Of those who aren’t, 22% are delayed but still close.
